Novo Resources has agreed to divest a 9% interest in New Found Gold (NFG) to a corporation controlled by Canadian investor Eric Sprott, for nearly $99.6m (C$125.9m).

The share sale by Novo Resources will be undertaken in two tranches, with the first tranche comprising 8.25 million NFG shares for gross proceeds of $54.5m (C$68.9m). This is scheduled for completion on 27 April 2022.

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The second tranche comprises 6.75 million NFG shares for gross proceeds of $45.1m (C$57m). It is due to be settled on 5 August 2022.

Novo executive co-chairman Mike Spreadborough said: “Novo has always considered its sizeable investment portfolio as a means to fund growth expenditure.

“The sale of our New Found holding at a premium of 9.3% to the closing price of C$7.68 is an excellent result and allows Novo to deleverage our balance sheet, continue to focus on optimising operations at Beatons Creek and aggressively accelerate growth and expansion plans across Western Australia and Victoria.

“We would also like to thank Sprott Lending for their support since our transition to operations in late 2020.”

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Novo plans to use the sale proceeds to advance its exploration works across the Pilbara and Victoria, Australia, as well as accelerate the feasibility study on the Fresh component of its Beatons Creek project in Nullagine, Western Australia.

Novo said that the transaction would help it become debt-free with Sprott Private Resource Lending II. This will enable Novo to repay its senior secured credit facility of $40m (C$50.5m) with Sprott, following the completion of the deal.

Upon deal closing, Sprott’s shareholding in NFG will expand to 51.6 million common shares, or 31.4%.